Debt

Debt refers to the amount of money or assets a borrower owes a creditor. Payment of debt is usually in the form of money, though it can also take the form of goods, service, and favors.
An individual incurs debt when a creditor agrees to lend money, goods or services on the terms of an agreement. In return, the individual can use credit to purchase goods or services, or as a form of money. The individual then pays back the creditor on the agreed terms. Because debt incurs interest, most debtors pay creditors a larger amount than was initially borrowed.

Companies also use debt as a way to finance more assets, such as stock. Using debt, a company can increase the value of stocks, while simultaneously increasing risk. Basically, a company takes on debt, for example in the form of a loan. It reinvests the money from that loan to earn more return than the cost of interest on that loan. However, if the investment goes back (remember credit default swaps?), the company is still stuck paying back the interest and principal on its loan.